2023 (11) TMI 516 - HC - GST

Cancellation of registration under Central Goods and Service Tax Act - Attachment of bank account - SCN do not provide for any reasons for incurable defect - Violation of principles of natural justice - HELD THAT - The show cause notice and order cancelling the registration clearly does not provide for any reason whatsoever for such action being taken against the petitioner and, therefore, there is an incurable defect in the order which cannot be improvised in the reply of the respondents - the order cancelling the registration ought to have contained reasons for the said cancellation of the registration and in the instant case, no such reason can be found in the order cancelling the registration - Insofar as the order cancelling the registration and show cause notice for such cancellation are concerned, the same is arbitrary and illegal. Attachment of the bank accounts - HELD THAT - The petitioner and the respondents are at ad idem that the petitioner should avail the remedy provided by sub-rule (5) of Rule 159 of the CGST Rules - It is opined that the petitioner needs to invoke sub-rule (5) of Rule 159 of the CGST Rules to the order of attachment in question as the rule itself would permit. Thus, in the facts and circumstances of the case, the discretionary jurisdiction under Article 226 of the Constitution of India not exercised to interfere in the impugned attachment order. The impugned show cause notice dated 18th September, 2023 is quashed and set aside. The consequential order dated 5th October, 2023 cancelling the petitioner s registration also would stand quashed and set aside - petition disposed off.

Summary

Issues involved:
The issues involved in the judgment are the challenge to the cancellation of registration under the Central Goods and Service Tax Act and the attachment of bank accounts.

Cancellation of Registration:
The petitioner challenged the cancellation of registration under the Central Goods and Service Tax Act, contending that the show cause notice and order did not provide any reasons, making it an incurable defect. The petitioner, being in judicial custody, could not respond to the notice, leading to an ex-parte decision. The petitioner argued that the lack of reasons in the cancellation order rendered it bad in law, citing a previous court decision. The court found that the order lacked reasons, similar to a previous case, and quashed the cancellation order, deeming it arbitrary and illegal.

Attachment of Bank Accounts:
Regarding the attachment of bank accounts, the petitioner claimed no prior intimation was given by the respondents, and he only became aware of the attachment through the banks. The respondents justified the attachment by pointing out that the petitioner transferred a significant amount while in judicial custody. They also highlighted discrepancies in the petitioner's statements regarding employees. The court opined that the petitioner should utilize the remedy under sub-rule (5) of Rule 159 of the Central Goods and Services Tax Rules to challenge the attachment. The court refrained from interfering with the attachment order, advising the petitioner to follow the prescribed remedy.

Judgment:
The court quashed and set aside the show cause notice and the subsequent cancellation of registration due to the lack of reasons provided in the order. The court clarified that the registration would be restored, but the revenue could issue a fresh order to suspend it if necessary. Additionally, the petitioner was permitted to raise objections to the bank account attachment using the remedy available under sub-rule (5) of Rule 159 of the CGST Rules within a week. The court disposed of the petition without imposing any costs.